Analysis of the Financial Sustainability of Urban Micro-distribution Centers



Analysis of the Financial Sustainability of Urban Micro-distribution Centers

Authors

Jaume Roca Guitart, Center for Innovation in Transport, Floridea Di Ciommo, Center for Innovation in Transport

Description

This paper focuses in the analysis of the financial parameters governing last mile urban consolidation centers and tries to show to what extent municipalities should support these initiatives for their long-term financial sustainability.

Abstract

Urban goods distribution is essential for the economic viability of cities but their impact on traffic congestion and the environment is problematic. Many European cities have held pilot initiatives on last-mile deliveries performed by electric bicycles or other sustainable modes of transport. Most of them are based on urban micro-consolidation centers in which goods are transferred from trucks belonging to different carriers to tricycles operated by a neutral operator. These actions had the primary objective of reducing emissions in highly densified areas as well as providing smoother deliveries, but a majority of them failed in being financially sustainable. The intervention of local authorities is deemed to be necessary to initiate and sustain these initiatives making them fragile when public funding end.

London and Paris have a wide experience on this kind of initiatives. While the former has a privately owned micro distribution delivery (Gnewt Cargo) the latter has a publicly subsidized operator (La Petite Reine). Subsidies are in general applied in many cases through R&D projects, public actions and in other ways. These funds are used to purchase tricycles, space to perform transhipment and even fund operational costs such as labour. In general, most pilots have needed the support of the municipal authorities to start up their activities and only few have continued to serve the city after public subsidies ran out.

This paper focuses in the analysis of the financial parameters governing last mile urban consolidation centers and tries to show to what extent municipalities should support these initiatives for their long-term financial sustainability. A stakeholder effect matrix is performed to analyse the general incidence for each stakeholder involved in the pilot case running in Barcelona within the European project Novelog. The main stakeholders affected by this initiative are the municipality, hauliers, retailers, shippers and citizens affected by operations. This methodology, which is used by the RAILPAG, enables to analyse investments, monetizing external costs to obtain the net present value of the whole investment. Conclusions can help municipal decision-makers to calibrate their investments in these type of measures.

Publisher

Association for European Transport